What happens if you can't afford to pay your bond?

What happens if you can't afford to pay your bond?

Look, we all go through financial difficulty or a rough patch. If you find that you can't afford to pay your bond, the first thing you have to do is approach your bank or the financial institution with whom you've taken the bond. This should happen BEFORE you actually miss the bond repayment. 

How many bond payments can you miss?

Ideally, you shouldn't miss any payments on a bond, because you will incur interest and make it even more difficult to catch up with your bond repayments. 

You will also have a flag on your credit report indicating a missed payment, and this could stay on your credit report for up to 7 years. A missed payment can also affect whether you're approved for credit in future, and the interest rate you're offered.

What alternative arrangements can the bank offer if you're struggling?

• Extend your bond period. If you're currently paying your bond over 20 years, the bank may recommend extending the repayment period to 30 years. This reduces your monthly repayment and can provide some relief. 
• A short-term repayment plan. Some banks (Absa offers this if you've had your home loan with them for 9 months or longer) will restructure your repayments for a limited period while you get back on your feet.
• Help selling your property. The bank may assist you with selling your property so that you avoid missed payments and accumulating arrears.

Moku Tip: Don't wait until you default on your home loan to act — the earlier you contact your bank, the more options you'll have.

If you've already missed a bond payment

• Respread of your arrears. The bank may suggest respreading the amount you're in arrears over a few months, so you're repaying a portion of your arrears alongside your normal bond instalment each month. 
• Bond payment holiday. Depending on the financial institution, they may offer a payment holiday for a portion or all of your bond for a few months. This means you'll incur interest and service fees, so your new bond repayment will be higher than the original amount once the holiday ends. 

Can you borrow against your bond?

If you've paid more than the minimum monthly instalment into your home loan, you can usually borrow against that extra amount — a facility often called an access bond. You can only access the extra amount you've paid in: if you've paid R3,000 extra towards your bond for the year, you'll only have access to R3,000. It's worth checking before taking out a separate personal loan for short-term expenses.

Is skipping a bond payment a good idea?

No — skipping a home loan payment, or any debt repayment, is never a good idea. It will be recorded on your credit report for up to 7 years and can negatively affect your credit score, which in turn affects whether you're approved for credit in future and at what interest rate.

How long does it take for a bank to repossess a house in South Africa?

A bank will usually only start legal proceedings after 3 or more months of missed payments. As with any credit agreement, they first have to issue a Section 129 Notice (a letter of demand), which can be sent 20 days after you default. Repossession is a last resort, but it is possible if you consistently default. It's also worth knowing that a repossessed home is usually sold at auction for less than it's worth — so you could still owe money on your home loan even after it's repossessed. 

An alternative solution that could save you up to 50% on your total monthly debt instalment

If you're struggling to keep up with your bond, you're very likely struggling with a few other debt repayments too. If that's you, we could save you up to 50% on your total monthly debt instalment — an affordable monthly amount that covers not just your home loan, but your other debts too.

"You could have an affordable monthly debt instalment for not only your home loan, but your other debts too!"

How can we save you 50% on your total monthly debt instalment?

We do this with debt counselling — a legal debt relief programme that helps South African consumers who are struggling to make their debt repayments. 

How does debt counselling work?

First, our expert Debt Counsellors assess whether you're really unable to make your monthly repayments, by looking at your income and expenses. 

Once that's established, we work out an affordable repayment plan to cover all your debts, negotiating with your creditors on your behalf to reduce the interest rate on your loans — which can mean saving on your total debt amount in the long run. 

When you go under debt counselling, your assets — including your home and car — are legally protected from repossession, and creditors can no longer harass you.

Let's chat about how debt review can help you save your house!

Watch this video with Founder & CEO of Meerkat, David O'Brien, as he unpacks the process:

Why should you consider Meerkat for debt counselling?

• We've already helped thousands of South Africans get out of debt. 
• We've been voted among The Top 10 Large Debt Counsellors in South Africa!
• We don't just say we care about you — our clients say that too.

Who is Meerkat?

Meerkat is a financial wellness company that wants to help South African consumers do MORE with their money. We can help with debt repayment negotiations, provide affordable insurance and help you kickstart an emergency fund.
Fill in the contact form on our website to receive a free callback from the Meerkat team today.